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Setback for Impax, Shares Plunge

Impax Laboratories, Inc. (IPXL) recently announced that the US Food and Drug Administration (:FDA) completed its re-inspection of the company’s manufacturing facility at Hayward.

The re-inspection was undertaken due to a previously disclosed Form 483 issued in Mar 2012.

Additionally, the FDA conducted a Pre-Approval Inspection (PAI) for candidate Rytary in order to validate the analytical method undertaken. Rytary is being developed for the symptomatic treatment of Parkinson’s disease.

Further, the FDA also conducted a general Good Manufacturing Practices (:GMP) inspection and observed deviations from the current practices by Impax.

We note that Impax has been hampered by quality control issues since 2011. In May 2011, Impax received a warning letter from the FDA after an inspection of the company’s facility at Hayward. The inspection was conducted between Dec 13, 2010 and Jan 21, 2011.

Subsequently, Impax responded to the warning letter and received an acknowledgement letter for a complete response from the FDA in Dec 2011.

Thereafter, in 2012, the FDA completed a re-inspection of the concerned facility along with a general GMP inspection and issued Form 483 with its observations. A satisfactory re-inspection by the FDA is mandatory to close the warning letter.

However, the outcome of the re-inspection was not positive for Impax. After the latest inspection, the FDA has issued a new Form 483 with 12 observations. Out of these12, 3 are repeat observations from inspections that occurred prior to the warning letter.

Impax expects to respond to these new observations within 15 business days from the receipt of Form 483. The news impacted the stock negatively.

Impax is working diligently on the issues noted by the FDA and expects to resolve the matter quickly. However, the new Form 483 remains a major overhang on the stock.